House prices to be hit by slow demand

I am City A.M's deputy editor, having joined the newsroom in late 2010 as an economics reporter.

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Julian Harris

SINKING demand from a cash-strapped population is set to send house prices tumbling in the coming months, according to the latest survey from Hometrack, released today.

The number of prospective house-buyers fell in August and September, while supply has outstripped demand so far this year.

“Continuing economic uncertainty both at home and in the Eurozone is likely to dent consumer confidence further,” said Hometrack’s Richard Donnell. “This can only result in demand slipping further over the final months of the year. As the gap between supply and demand widens, we are likely to see an acceleration in the level of price falls as we head towards the end of the year,” he said.

The survey has found house prices falling for 15 consecutive months across the UK. London has bucked the trend, however. “It has been the relative strength of the London market where growth has averaged +0.2 per cent each month that has supported the headline rate of growth this year,” Donnell added.

Overall prices fell by 0.1 per cent last month, the survey found, and were down across 25 per cent of the country. There was a 2.5 per cent dip in the number of prospective buyers registering with estate agents. In August, demand slipped by 1.2 per cent.

Houses in London and the south east came the closest to matching their asking prices than in any other region of the UK, the survey said, with both regions on course for further price increases.

Final prices in the capital are over 94 per cent of the level of asking prices, with properties in the rest of the south east fetching around 93.5 per cent of their asking prices.

At the other end of the scale, houses in the north west and north east are selling for less than 92 per cent of their asking prices. Along with Wales, the two regions are set for further price depreciation, Hometrack said.